EU country with significant renewable potential hits a wall: investors do not trust it

According to a statement by a representative of Poland's energy regulatory authority, more wind power plants could be built in Poland if the investment environment improved. He says the main obstacle to greater development is the instability of the legal framework, which has left investors with little appetite to invest in Poland.

Our northern neighbours are apparently running into difficulties in their efforts to develop renewable energy sources. Several years of an unstable legal environment are now coming back to haunt the Polish government – investors simply do not trust the environment.

Poland has yet to meet its renewable energy share target under the European climate targets for 2020. In 2015, when the share of renewable sources reached nearly 12%, renewable development slowed significantly, and according to data for 2017, the renewable share reached only 10.9%. The Polish government's interventions are to blame, as it seeks through various measures primarily to protect coal-fired electricity producers and consumers.

Regaining investors' trust will not be easy. Many companies still remember the introduction of new rules for wind power plants that made their projects unprofitable.

As a result of new legislation from 2016, the so-called 10H rule was introduced, significantly restricting the locations where wind power plants can be built. The legislation also introduced new audits that must be carried out every two years. Property taxes were also increased by raising the tax base for turbines. Although some changes were reverted to their original state last year, this could not restore investor confidence.

Poland was once considered one of the most promising markets for wind energy development. There is potential for both offshore and onshore wind power plants.

Interventions in legal certainty are not isolated

ČEZ Group also joined the wave of investment in Poland, but withdrew from some projects following the legislative change and is now developing only selected projects. Last year, ČEZ took part in a support auction with its Krasin wind power project, but was unsuccessful and plans to participate in further auction rounds.

Poland does not shy away from controversial steps in other energy sectors either. Recent examples include in particular the electricity price cap, which was intended to protect customers from rising electricity prices. These rose sharply last year as a result of higher emissions allowance prices.

Among earlier interventions was the introduction of a controversial obligation for traders importing gas into Poland. They had to maintain a certain amount of gas in storage, which is operated primarily by PGNiG, 70% owned by the Polish state.